M

No. 01 C 8375 Page 4

committed as a Coldwell franchisee and described the benefits to plaintiff if it entered into a
Cendant Mobility broker agreement. These statements fall within the subject matter of the
Associate Broker Agreements, The 1998 and 1999 contracts are complete and unambiguous.
Once these documents were signed, plaintiff was no longer justified in relying on the prior
alleged promises.

Plaintiff asserts that even if the alleged statements were superseded by the contracts,
it had already relied, to its detriment, on the statements before signing. To the extent that
plaintiff's claim is not barred by the doctrine of merger, it fails because the alleged
misrepresentations are promises of future conduct. Fraudulent promises are not actionable

under Illinojs law unless they are part of a scheme to defraud. HPI Health Care Services v.

Mt. Vernon Hospital, Inc., 131 Ill.2d 145, 168, 545 N.E.2d 672 (1989). A series of false
promises are only actionable if either they are particularly egregious or they are “embedded
in a larger pattern of deceptions or enticements that reasonably induces reliance and against
which the Jaw ought to provide a remedy.” J.H. Desnick, M.D. v. American Broadcasting
Companies, Inc., 44 F.3d 1345, 1354 (7th Cir. 1995). In determining if plaintiff has stated a
claim for promissory fraud we also take into account the vulnerability of the victim to the
alleged promises. Id.

Plaintiff claims that defendants made a series of false promises regarding the benefits
of switching from the Coldwell referral system to the Cendant referral system. Most of the
alleged misrepresentations were general statements made to a group of Coldwell franchisees
and fit well within the “realm of puffery, bragging, ‘mere words,’ and casual bonhomie, rather

than to that of serious commitment.” Id. The alleged statements made specifically to plaintiff


No. 01 C 8375 Page7

the parol evidence rule. See Barille, infra.

CONCLUSION
For the above reasons, defendants’ motion to dismiss counts I, II and III of plaintiff's
complaint is granted. Since plaintiff has voluntarily dismissed count IV, plaintiff's complaint

is dismissed.

JAMES B. MORAN
Senior Judge, U. S. District Court

H “4 24, 2002.


No, 01 C 8375 Page 3

plaintiff to remain a Coldwell franchisee and sign the Cendant broker agreements. To
withstand a Rule 12(b)(6) motion this claim must include allegations of a false statement of
material fact; knowledge or belief of its falsity by the person making the statement; intent to
induce the other party to act; action by the other party in justifiable reliance on the truth of

the statement; and damages resulting from such reliance. Barille v. Sears Roebuck and Co.,

289 IN.App.3d 171, 176, 682 N.E.2d 118, 123 (1st Dist. 1997).

Under the doctrine of merger, if a contract is complete on its face it supersedes all prior
agreements on the same subject matter. Jd. It follows that a party cannot justifiably rely on
allegedly false inducements to enter into an agreement if the subject matter of the
representations has been integrated into an unambiguous contract provision. Minasian v.

Standard Chartered bank, PLC, 109 F.3d 1212, 1215 (7th Cir. 1997), If a contract is attached

to a complaint, we can Jook to it in our analysis under Rule 12(b)(6). M_J_ & Partners

Restaurant Ltd. Partnership v. Zadikoff, 1998 WL 242613 (N.D.IIL 1998),

Here the parties signed a series of annual contracts labeled Associate Broker
Agreements, which are attached to plaintiff's complaint. The first contract, executed February
25, 1998, provides that Cendant Mobility will enlist plaintiff as an associate in its Cendant
Mobility network in exchange for referral fees and commissions, The second contract,
executed in December 1999, is more detailed regarding the parties’ commitments and includes
an integration clause which states that the agreement “constitutes the entire agreement and
understanding between the parties hereto concerning the subject matter of this Agreement”
(cplt.exh.E, p.7).

Allegedly, defendants’ misrepresentations were inducements to keep plaintiff


No, 01 C 8375 Page 5

are the promises of referral percentages and the promise of plaintiff's eventual status as
principal broker in its area, The only scheme alleged here was a sales pitch by Cendant to get
plaintiff to sign on to the new referral plan, the terms of which are then laid out in the
subsequent contracts. In light of plaintiff's background in this field, these alleged
misrepresentations are not an “elaborate artifice of fraud .” Id. at 1345.

In count II, plaintiff claims a violation of the Illinois Consumer Fraud and Deceptive
Practices Act (ICFA). Plaintiff asserts that it is a consumer within the scope of the ICFA, and
as such it was misled, deceived, and damaged by Cendant Mobility’s allegedly deceptive acts,
Defendants contest plaintiff's status as a consumer to bring this claim and argue that plaintiff
has failed to allege a deceptive act.

Plaintiff points to Bixby’s Food Systems, Inc. v. MacKay, 985 F.Supp. 802 (N.D.IIL
1997), to support it’s position that a franchisee is a consumer under the ICFA. In Bixby, the
court found that two individuals who purchased development and franchise rights were
consumers of merchandise for purposes of the ICFA. Id. at 807, citing 815 ILCS § 505/1(b)
and (e). In its discussion, the Bixby court focused on the alleged merchandise and found that
the purchase of development and franchise rights brought the individuals within the definition,
of consumers. Jd, Here we have two commercial entities entering into a contract to exchange
fees and commissions for inclusion in a referral network. Plaintiff does not fit into the
definition of consumer in this situation.

Asa non-consumer, plaintiff may bring a claim only if it can allege a nexus between the

complained-of conduct and consumer protection concerns. Athey Products Corp. v. Harris

Bank Roselle, 89 F.3d 430, 437 (7th Cir. 1996). A plaintiff must plead that the alleged


be AO 450(Rev. 5/85)Judgment in a Civil Case

United States District Court

Northern District of Illinois
Eastern Division

Properties Unlimited, Inc. etc. JUDGMENT IN A CIVIL CASE
v. Case Number: 01 C 8375

Cendant Mobility Services etc et al

Oo Jury Verdict. This action came before the Court for a trial by jury. The issues have been
tried and the jury rendered its verdict.

a Decision by Court. This action came to trial or hearing before the Court. The issues
have been tried or heard and a decision has been rendered.

IT IS HEREBY ORDERED AND ADJUDGED that defendants’ motion to dismiss counts I, II
and IH of plaintiffs complaint is granted. Since plaintiff has voluntarily dismissed count IV,
plaintiff's complaint is dismissed.

Michael W. Dobbins, Clerk of Court

Date: 5/24/2002 DPD BHA eee —

Willie A. Haynes, Deputy Glerk



os

~ Mit_ “Order Form (06/97)

United States District Court, Northern District of Iinois

)

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge James B. Moran than Assigned Judge

CASE NUMBER 01 C 8375 DATE 5/24/2002

CASE Properties Unlimited, Inc. Vs. Cendant Mobility Services et al.

TITLE

[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.}
Memorandum Opinion and Order

DOCKET ENTRY:

(1) o Filed motion of [ use listing in “Motion” box above.]

(2) ag Brief in support of motion due

(3) Oo Answer brief to motion due. . Reply to answer brief due.

{4) i} Ruling/Hearing on set for at

(5) Qo Status hearing[held/continued to] [set for/re-set for] on set for at

(6) im Pretrial conference[held/continued to] [set for/re-set for] on set for at .

(7) oO Trial[set for/re-set for] on at

(8) o (Bench/Jury trial] [Hearing] held/continued to at

(9) im) This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

COFRCP4(m) OlGeneral Rule 21 CIFRCP41(a)(1) C1 FRCP41(a)(2).

(10) (Ml [Other docket entry] Enter Memorandum Opinion and Order. Defendants’ motion to dismiss counts
I, I and III of plaintiffs complaint is granted. Since plaintiff has voluntarily dismissed count IV,
plaintiff's complaint is dismissed.

(il) [For further detail see order attached to the original minute order.]

No notices required, advised in open court,

No notices required.

umber of notices

Notices mailed by judge’s staff. y

HAY 2.3202

Notified counsel by telephone, i

Docketing to mail notices.

Mail AO 450 form,

Copy to judge/magistrate judge.

courtroom date mailed notice

deputy's
initials

WAH

.. Date/time tecelved in
central Clerk's Office

railing deputy initials



No. 01 C 8375 Page 6

conduct involves trade practices addressed to the market generally or otherwise implicates
consumer protection concerns. Jd; Downer’s Grove Volkswagen, Inc. v. Wigglesworth
Imports, Inc., 190 IH. App.3d 524, 533, 546 N.E.2d 33, 4 (2nd Dist. 1989). One Illinois court has
gone so far as to require that a plaintiff who is claiming an implication of consumer protection
concerns must specifically plead that his actions were akin to a consumer’s actions; how
defendant’s actions concerned consumers other than plaintiff; how defendant’s actions
involved consumer protection concerns; and how the requested relief would serve the interests
of consumers, Brody v. Finch University of Health Sciences/The Chicago Medical School, 298
Il App.3d 146, 160, 698 N.E.2d 257, 269 (2nd Dist. 1998). Since plaintiff has failed to allege a
nexus between the complained-of conduct and consumer protection concerns, it does not have
standing to bring the ICFA claim in count II.

In count II, plaintiff claims Cendant Mobility breached a verbal contract when it
allegedly failed to send plaintiff 25 per cent of the referrals in its area and make it the sole
principal broker in the area at the first opportunity. Defendants argue that any alleged
agreement merged into the later contracts, and as such plaintiff is barred from recovery.
Plaintiff asserts that the alleged oral promises were part of a separate agreement and
constitute a distinct contract from the later Associate Broker Agreements.

Allegedly, plaintiff agreed to become an associate broker as consideration for the
promised percentage of referrals and eventual broker status. In attempting to identify what
it offered in consideration for the alleged oral promises, plaintiff confirms that the subject
matter of the alleged oral contract was the same as the later written contracts. As discussed

above, any alleged oral agreements are superseded by the written contracts and are barred by


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

PROPERTIES UNLIMITED, INC.
REALTORS, an Illinois corporation,

Plaintiff,
No. 01 C 8375

DOCKETED

MAY 28 2002

YS.
CENDANT MOBILITY SERVICES, a
Delaware corporation, CENDANT

CORPORATION, a Delaware
corporation,

)
)
)
)
)
)
)
)
)
)
)
)
)

Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff Properties Unlimited, Inc. Realtors brings this action against Cendant Mobility
Services (Cendant Mobility) and Cendant Corporation (Cendant) alleging common law fraud,
violations of the IMinois Consumer Fraud and Deceptive Practices Act (ICFA), and breach of
contract. Defendants move to dismiss the claims against them. For the following reasons,
defendants’ motion is granted.

BACKGROUND

The facts of this case are taken from plaintiff's complaint. Plaintiff, a real estate
brokerage firm incorporated in 1985, joined the Coldwell Banker Real Estate Corporation
(Coldwell) network in 1990 as a conversion franchisee. Plaintiff participated in the Coldwell
Relocation Plan through which it paid fees for referrals from the franchisor and other

Coldwell offices. Based on its success with the referral program, plaintiff renewed its

6

franchise agreement in 1995, effective through January 29, 2002.


No. 01 C 8375 Page2

Cendant allegedly acquired the franchisor of the Coldwell network in 1996, adding it
to other national real estate brands already under its control. Cendant then moved to replace
the Coldwell Relocation Plan with the Cendant Mobility Program. Cendant Mobility allegedly
made a series of knowingly false oral representations to plaintiff designed to induce plaintiff
to switch referral plans, including assurances that plaintiff would receive at least 25 per cent
of all referrals in its trade area and would become the principal broker in its area at the
earliest opportunity, It allegedly remained a Coldwell franchisee and signed a series of
agreements with Cendant Mobility relying on these representations. Plaintiff now claims that
it did not receive the referrals it was promised and was passed over when the opportunity
arose to move it into the position of principal broker.

DISCUSSION

In deciding a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss, we accept as
true all well-pleaded factual allegations of the complaint, drawing all reasonable inferences in
a plaintiff's favor. Midwest Grinding Co. v. Spitz, 976 F.2d 1016, 1019 (7" Cir. 1992), A claim
survives if relief can be granted under any set of facts that can be proved consistent with the
allegations, Hishon y. King & Spalding, 467 U.S. 69, 73 (1984) citing Conley v. Gibson, 355
U.S. 41, 45-46 (1957). While a complaint does not need to specify the correct legal theory to
withstand a Rule 12(b)(6) motion, the complaint must allege all elements of a cause of action
necessary for recovery. Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985) cert.
denied 475 U.S. 1047 (1986).

In count I, plaintiff claims that Cendant Mobility, on behalf of itself and Cendant,

committed common law fraud when it allegedly made knowingly false statements to induce